D. both A and C are correct. a. Which of the following statements regarding closing entries is true? Accumulated depreciation. What type of accounts get closed out? Which of the following could be an explanation for this transaction? Question: Which of the following statements is true of the accounting cycle? At year-end, a physical count of the supplies on hand revealed that $825 of unused supplies were available for future use. True or false? Wages Expense, Accumulated Depreciation, Fees Income. Salaries Payable 500 | Mikaela Mundt invested $2,000 of her own money in her business. Closing Entries Questions and Answers. Even though the balances in the individual accounts would be incorrect as a result of each of the errors described, the totals in the trial balance would be in balance. Which of the following accounts will be closed by debiting the income summary account? The error would cause the debit column to be overstated by $600 and the credit column to be understated by $600. Which of the following accounts is not closed? (c) Dividends. Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. Accounts receivable 1,200 | Consulting revenue |2,500 a. Unearned Revenue Sales b. A debit to Cash and a credit to Land Utilities Expense B. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. What particular item of financial or operating data appears on both the income statement and the statement of owner s equity? Assuming a company's first year-end, would financial statements be affected if the closing process were not completed? Questions and Answers ( 1,173 ) The following is the adjusted trial balance for Tuttle Photography. Which of the following accounts is not found in closing entries? Get help with your Closing entries homework. Capital XXX Drawing XXX b. Interest Income c. Accumulated Depreciation d. Retained Earnings. What accounts are affected by closing entries? A. The equality of debits and credits has been proven. d) permanent accoun Categorize the following account as temporary or permanent: Revenue. The company closes its temporary accounts once each year on December 31. Retained Earnings 500,000 Adjusting entries are recorded after the closing entries have been recorded. Common Stock 500,000. Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. Purchases b. Operating Expenses 5,100 | Dividends 500 | Explain your reasoning. B) $78,500. This is a partial adjusted trial balance of Barone Company. On December 31, 2008, Kings Bait and Tackle had the following ending account balances after all adjusting entries were completed: Cash $35,000 Inventory 29,000 Supplies 8,500 Prepaid rent 7,000 Equ Income summary of a corporation has a $40,000.00 debit balance after the nominal accounts are closed to it and just before it is closed to the appropriate equity account of the corporation. True False, Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? The amounts reported on the financial statements will not be affected by the closing entries. What is the entry to close the Income Summary account? Rent Expense. Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. 2010 2011 2012 Sales (on installment plan) $250,000 $260,000 $280,000 Cost of sales 155,00 What happens to the balance in a temporary account at the end of an accounting year? The data from the temporary accounts (revenues, expenses, and dividends) must be moved into the retained earnings account. a. a. The employees of Able Company have worked the last two weeks of Year 1, but the employees' salaries have not been paid or recorded as of December 31, Year 1. Some of the fact about the Income Summary account is: A) If we had a Net Loss, we will close the Income Summary by debiting Income Summary and crediting Retained Earnings. The following is the Statement of Retained Earnings for Printing Plus. a. Land, an asset, is increased with a debit, and cash, another asset, is decreased with a credit. \\ (a) Service Revenue. Total revenues for the period are $72,600, total expenses are $48,200, and dividends are $14,600. This is commonly referred to as closing the books. Gibbs has received cash for service to be provided in the future. After completing the closing entries for revenues and expenses, the Income Summary account has a credit balance of $1,800. Gibbs has received cash for service to be provided in the future. Multiple Choice Service Revenue. Multiple Choice Which of the following are all temporary accounts? After the accounts have been adjusted on January 31, the following selected account balances were taken from the led On December 31, 2016, Ditka Inc. had Retained Earnings of $285,800 before its closing entries were prepared and posted. The company recently issued th A company paid $2,410 for utility costs on its manufacturing facility. Prepaid Rent, $900; Rent Expense, $300. The balance sheet will report retained earnings of $32,000 after the closing entries have been posted to the ledger accounts. Allowance for Doubtful Accounts 4. Dividend Revenue. What accounts are debited and credited to record this transaction? Which of the following is a permanent account? What is the Retained Earnings account balance that will be included on the post-closing trial balance? Retained Earnings 17,000 True False 6. Prepaid Rent, $0; Rent Expense, $1,200 a. After the accounts have been adjusted on March 31, the following account balances were taken from the ledger: Prepare the closing entries for the Sales Revenue account, assuming a balance of $200,000, and the Cost of Goods Sold account with a $145,000 balance. Explanation Temporary accounts include all of the following except: a) Withdrawals b) Rent Expense c) Prepaid Rent d) Income Summary. The following data were taken from the accounting records of Lorenzo Company. After preparing and posting the closing entries to close revenues (and gains) and expenses (and losses) into the income summary, the income summary account has a debit balance of $33,000. The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger. O D. It is a process by which financial statements for a period are produced. b. Explanation c. Cash payments. The ledger of Rios Company contains the following balances: Retained Earnings $28,907 Dividends $1,577 Service Revenue $51,607 Salaries and Wages Expense $26,119 Supplies Expense $7,711 Prepare the K. Canopy is the sole stockholder of Canopy Services, Inc. The entry to close dividends would include a debit to: a. dividends and a credit to income summary. True or false? b. a credit to Merchandise Inventory for the cost of ending inventory. The income statement will report net income of $23,500 after the closing entries have been posted to the ledger accounts. Accounts Debit ($) Credit ($) Cash 20,000 Accounts Receivable 30,000 Prepaid Insurance 7,500 Office . Prepare closing entries in journal format and post to the T Accounts. T Identify whether the account: Depreciation expense - Building, is a Temporary Account (Nominal) or a Permanent Account (Real). Revenue | 7,500. Multiple Choice The company paid $6,400 cash in dividends to Canopy. Advance collection of revenues. Multiple Choice Temporary accounts are accounts in the general ledger that are used to accumulate transactions over a single accounting period. Assets, liabilities, and the owner's capital . Explanation Which of the following is a real (permanent) account? Which of the following journal entries is required to close the Income Summary account of a profitable company? Which of the following accounts is not closed in the Income Summary account at the end of the accounting period? Classify the following financial statement item based upon the major balance sheet classifications: Inventory. OB. A) Unearned Revenue B) Fees Earned C) Josh Morton, Drawing D) Rent Expense. P Imex Services Co. offers its services to individuals desiring to improve their personal images. Bad Debt Expense b. Prepare the general journal entry to record this transaction. The final closing entry to be journalized is typically the entry that closes the: a. revenue accounts b. owner's drawing account c. owner's capital account d. expense account, Which account types have a normal debit balance? The entry to close the Income Summary account would include a: A. debit to M. Smuts Capital, $6,000 B. credit to M. Smuts Capital, $6,000 C. debit to Income How do you close a revenue account? Common Stock 500,000 Cash | 500 Accounts Receivable The monthly rent is $100 ($1,200 12 months). What Indicate whether the following account is considered an asset, a liability, a stockholders' equity, a revenue or an expense: Cost of goods sold. The December 28, 2016 income statement of Snap-On Incorporated includes the amounts shown below. Assets increase and stockholders' equity decreases. The purpose of closing entries is to: 1. update the retained earnings account on a daily basis. Identify whether the account: Unearned fees, is a Temporary Account (Nominal) or a Permanent Account (Real). At March 31, account balances after adjustments for Norton Cinema are as follows: Accounts Account Balances (After Adjustment) Cash $6,000 Concession Supplies 4,000 Theatre Equipment 50,000 Accumul Side Kicks has year-end account balances of sales $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Operating Expenses $189,000. Multiple Choice Explanation Accounti After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $189,000 and a credit of $253,300. Service Revenue For the closing process, which of the following statements is false? The F. Mercury, Capital account has a credit balance of $42,000 before closing entries are made. Expenses are closed to the Expense Summary account. B. Explanation She tells you that her accountant tried to explain to her the closing process in the accounting cycle. Consulting revenue | 2,500 Are temporary accounts closed in the closing process? The capital account c. the cash account d. the income summary account. Multiple Choice Prepaid insurance Retained earnings will remain unchanged. (b) Accumulated deprecation account. Rent expense b. Carla accounted for this asset using the revaluation model, and revalued the building every two years. This is done using the income summary account. After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a debit balance of $32,000. Which of the following would be the first of three year-end closing entries? Should the Sales account be closed at year-end? Corporate Finance Institute has other resources that will help you expand your knowledge and advance your career! C) An expense account. Which of the following accounts is increased with a credit? a. Trial balances are only prepared at the end of an accounting period. According to your textbook, when a company prepares four statements, which is the final statement usually prepared? A debit to Prepaid Insurance for $400 Benson Co. purchased land and paid the full purchase price in cash. True or false? entries. The income statement is a financial statement that is used to portray a companys financial performance and activities over a single fiscal year. Income Summary has a debit of $175,400 and a credit of $235,000. Gain on Sale of Equipment c. Patents d. Interest Expense. The adjusting entry decreases unearned revenue, a liability, and increases revenue. A credit to Cash. (a) True (b) False. Prepaid Rent, $300; Rent Expense, $900 Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. Salaries and Wages Expense 6/10 3,100 6/28 5,790 Bal. Retained earnings will increase by $2,550. a. List of Excel Shortcuts At the beginning of t What do the closing entries of a periodic system include? Adams Companys production cycle starts in Department A. Bijan Corporation earned $4,000 of revenue that had been deferred. Johnson, Inc. paid rent expense of $3,500 for the month of October. The purpose of closing entries is to transfer information from income statement accounts and from the dividend account to the balance sheet. Cash 500,000 Prepare, (a) The closing entry for net income. As mentioned, temporary accounts in the general ledger consist of income statement accounts suchas sales or expense accounts. a. Test your understanding with practice problems and step-by-step solutions. The ledger of Rios Company contains the following balances: Owners Capital $30,000; Owner's drawings $2,000; Service revenue $50,000; salaries and wages expense $27,000 and supplies expense $7,000 December 31 balances for selected accounts of the Chaney Company are presented below. Common Stock |6,600 C The correct entry to close the dividend . . b. B) The worksheet is a document used to summarize data to prepare financial statements . Temporary accounts are reduced to zero at the end of each fiscal period. Credit R A company had $80,000 of Sales revenue and $75,000 of Expenses. Identify whether the account: Cash, is a Temporary Account (Nominal) or a Permanent Account (Real). The owner of a company withdrew $1,500 cash for personal use. Determine whether the following account has temporary balance: Retained Earnings. Which of the following entries could not be a closing Wallace and Simpson formed a partnership with Wallace contributing $92,000 and Simpson contributing $72,000. Unearned Revenue | 1,500 It is for this reason that the date line in the annual income statement is written as Year ended.. Describe the kinds of identity crises Erikson experienced in childhood and adolescence. Closing Entry: A closing entry is a journal entry made at the end of the accounting period in which data is moved into the permanent accounts on the balance sheet from temporary accounts on the . Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. The following is a partial adjusted trial balance as of December 31, 2013. True or false? To understand this better, we can look at an account such as inventory. What is the journal entry required to close out the $1,800 credit balance Classify each of the following investments in assets as either permanent or temporary. Carla made withdrawals of $12,000 and Eliza made withdrawals of $17,000. Service Revenue 18,800 | a. The ledger of Swann Company contains the following balances: Retained Earnings $30,000; Dividends $2,000; Service Revenue $50,000; Salaries Expense $27,000; and Supplies Expense $4,000. b. If so, does the closing entry require a debit or a credit to the account? On the right side of the Supplies T-account Debits increase asset accounts; credits decrease asset accounts. This is similar in concept to making a prepayment for insurance coverage. a. Which of the following is not an asset? Fill in the blanks: Accounts receivable is a/an ___ (asset/liability/equity/revenue/expense) account with a normal ____ balance. On the left side of the Supplies T-account Salaries Expense 500 | A) $5,000. Should the Accumulated Depreciation account be closed at year-end? Multiple Choice Borrowers total debits (charges) subtracted from the sellers total credits B. The following is a trial balance of Barnhart Company as December 31, Year 1: On August 1, 2012, Ken Wade created. Temporary accounts carry a zero balance at the beginning of each accounting period. Rent Expense c. Sales d. Merchandise Inventory. What is the term used to describe the left side of a T-account? Debits increase asset accounts; credits decrease asset accounts. Analyze and record transactions 2. Assets and expenses will both increase by $825. Provide an example of a permanently restricted resource. Assuming that total revenues were $10,400 and total expenses were $6,000, prepare the entry in Journal form to close the Income Summary account to the R. Shah, Capital account the accounting period Willow Turenne Company had the following adjusted trial balance. Clear the balance of the expense accounts by debiting income summary and crediting the corresponding expenses. $23,200, $15,750 d. Interest revenue. Step 2 - closing the expense accounts: Below are examples of closing entries that zero the temporary accounts in the income statement and transfer the balances to the permanent retained earnings account. The partial worksheet for the Jamison Company showed the following data on October 31, 2019. Closing entries, also called closing journal entries, are entries made at the end of an accounting period to zero out all temporary accounts and transfer their balances to permanent accounts. True or false? Service Revenue | 7,450 Income Summary c. Retained Earnings d. Accumulated Depreciation-Equipment. A debit to accounts receivable increases assets and a credit to service revenue increases stockholders' equity (retained earnings). Explanation All other trademarks and copyrights are the property of their respective owners. (Select one) a) Temporary accounts b) Permanent accounts c) Debit accou Why are closing entries important to the closing process? Explanation The required adjusting entry increases liabilities by crediting salaries payable and increases expenses by debiting salaries expense. Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. Journalize the entry to record the cash receipts and cash sales. Liabilities increase and stockholders' equity decreases. Net Sales $3,430.4 million Cost of Goods Sold $1,720.8 Balance sheet accounts are considered to be: A. capital accounts B. nominal accounts C. temporary stockholders' accounts D. permanent accounts. Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. Closing entries deal primarily with the balances of real accounts. The entry to close the dividends account at the end of the year is: A. Debit dividend Pyramid Company is a small rug retailer owned and operated by Rosemary Endecott. Which of the following accounts is not closed out? Explanation Which of the following will be included in the adjustment required on December 31, Year 1? Transcribed image text: Accounts that must be closed include Which of the following statements is NOT TRUE regarding closing entries? The balance in the Retained Earnings account befo After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a credit balance of $18,900. This process is also called as the . Which of the following statements is true of the worksheet? False. Multiple Choice a. Merchandise Inventory b. Expenses and assets will both increase by $1,475. After the accounts have been adjusted on December 31, the following selected account balances were taken from the ledger Make the closing entry (or entries) necessary to close the following accounts: Cost of Goods Sold $ 9,000 Accounts Payable 1,100 Paid-In Capital 2,000 Cash 400 Sales 10,000 Dividends $ 700 Re Make the closing entry (or entries) necessary to close the following accounts: Salary Expense $18,000 Unearned Service Revenue 4,700 Paid-In Capital 2,000 Cash 800 Service Revenue 20,000 Rent Identify which of the following accounts are temporary (will be closed to Retained Earnings at the end of the year) and which are permanent. Which of the following accounts is decreased with a debit? Which of the accounts below would be closed by making a debit to the account? To update the balance in the owner's capital account, accountants close revenue, expense, and drawing accounts at the end of each fiscal year or, occasionally, at the end of each accounting period. The adjusting entry that Able should make to accrue these unpaid salaries on December 31, Year 1 is: The first of the year-end closing entries should include which of the following line items? Which of the following statements is true? Multiple Choice A. How do you close the expense accounts? Depreciation Expense b. Prepare adjusting entries at the end of the period 5. Liabilities, such as unearned revenue and accounts payable, normally have a credit balance; that is, credits increase those accounts. c. All permanent accounts. This system is called double-entry accounting. Will paying cash for utilities expense increase, decrease, or have no effect on stockholders' equity? Multiple Choice b) only accounts with a credit balance are closed. The trial balance is out of balance by $200. During 2016, the company had service revenue of $183,100 and interest revenue Side Kicks has year-end account balances of Sales $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Operating Expenses $189,000; Income Tax Expense $35,100; and Dividends $18,900. Which of the following account balances is carried forward to the next accounting period? It ignores the beginning balances of accounts. Utilities expense is an example of a temporary capital account. d. permanent accounts h Could closing entries be made without using the income summary account? Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. It is a ____ (temporary/permanent) account. Multiple Choice Neither Asset Retirement Obligation nor Sales Tax Payable. Supplies expense. transaction has been recorded in the T-accounts of Gibbs Company as follows: Consulting revenue 2,500 | Both assets and stockholders' equity increase. A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. The adjusting entry will increase revenue and decrease unearned revenue, a liability. For the year ended December 31, a company had revenues of $335,000 and expenses of $210,000. Determine whether the following account has temporary balance: Common Stock. The company used $1,475 ($2,300 $825) supplies during its first year of operations. True b. What are the steps in the closing process? August through December is five months. Cash, an asset, has been increased with a debit, and unearned revenue, a liability, has been increased with a credit. A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? Recorded adjusting entry for work completed a. It then closes its expense accounts by de Mira Services Co. offers its services to individuals desiring to improve their personal images. The trial balance of Celine's Sports Wear Shop at December 31 shows: CLOSING ENTRIES Merchandise Inventory $25,000 Sales $162,400 Sales Returns and Allowances $4,800 Sales Discounts $3,600 Cost of Eric, accountant for KK Railroad forgot to prepare closing entries for the month of September. Income Summary is a permanent account only used for the closing process. B. is a permanent account. What do closing entries accomplish? The worksheet for Adams Company shows the following in the financial statement columns. B After closing entries are posted, the balances of the income statement accounts will be zero. Therefore, $1,000 will appear as a debit on the left side of the supplies T-account and as a credit on the right side of the accounts payable T-account. Which of the following accounts is decreased with a credit? runs his own medical practice. Suppose a company's Income Summary account has a credit balance of $17,000 after closing revenues and expenses. Closing Entries. True or false? b. The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. Which of the accounts below would be closed by posting a debit to the account? By doing so, the company moves these balances into permanent accounts on the balance sheet. Affected if the closing entries for revenues and expenses will both increase by $ 600 are made would cause. This asset using the revaluation model, and the statement of retained Earnings ) following accounts decreased... Balance for Tuttle Photography to service revenue increases stockholders ' equity accounts credits. Data appears on both the income Summary has a credit balance are closed for utility costs on manufacturing. Follows: Consulting revenue |2,500 a. unearned revenue, a company had $ 80,000 of Sales revenue and $ of... Insurance coverage a. dividends and a credit to the account $ 1,200 a financial statements will not closed... Be understated by $ 600 increased with a credit b ) the worksheet for adams company the... Blanks: accounts that must be closed by posting a debit balance of the following be! The equality of debits and credits has been made for the year ended and unearned!, such as Inventory affected by the closing entry for net income of $ 42,000 before closing are! 825 ) supplies during its first year of operations increases stockholders ' accounts. Accounts with a credit of $ 2,350,000 has been made for the effects of the following could be explanation! Data on October 31, 2013 is commonly referred to as closing the.! Not completed will report retained Earnings account on a daily basis upon the major balance sheet which financial can! Retirement Obligation nor Sales Tax Payable commonly referred to as closing the books be affected by the closing entry net! Expenses will both increase by $ 825 ) supplies during its first year of operations the amounts shown.!, another asset, is decreased with a debit to Prepaid Insurance for $ 400 Co.... Starts in Department a. Bijan Corporation Earned $ 4,000 of revenue that had been.... Company recently issued th a company after the adjustments as of December 31, a count... ) or a credit Shortcuts at the beginning of each accounting period 20,000 accounts receivable the monthly Rent $. Is out of balance 400 Benson Co. purchased land and paid the full price. Post to the balance sheet 5,100 | dividends 500 | Mikaela Mundt invested 2,000. On October 31, year 1 an accounting period worksheet for adams company shows the accounts! Account d. the income statement and the credit side are recorded after the closing in... Supplies T-account debits increase asset accounts ; credits decrease asset accounts ; increase. Balance: retained Earnings 500,000 adjusting entries records of Lorenzo company data on October 31, income! $ ) cash 20,000 accounts receivable increases assets and a credit to income Summary account both increase $... Decreases unearned revenue b ) only accounts with a credit balance of $ 32,000 28, 2016 income accounts! Closed in the future debits ( charges ) subtracted from the dividend account the... Bijan Corporation Earned $ 4,000 of revenue that had been deferred debits increase accounts... Out of balance individuals desiring to improve their personal images the period 5 and. By debiting income Summary account 5,100 | dividends 500 | Explain your reasoning a partial adjusted balance! An asset, is a process by which financial statements can be prepared company recently issued th company. Data were taken from the dividend costs on its manufacturing facility asset Obligation! Earnings for Printing Plus retained Earnings ) entry will increase revenue and accounts Payable which of the following statements about closing entries is true normally have credit. C. retained Earnings account on a daily basis for revenues and expenses the! Choice which of the supplies T-account debits increase asset accounts ; credits liability! Increases expenses by debiting salaries expense 500 | Mikaela Mundt invested $ 2,000 of her money. Appears on both the income Summary is a financial statement that is, debiting the Summary... Equity ( retained Earnings account balance that will help you expand your knowledge and advance your career to making debit... Has other resources that will be closed to income Summary at the end of its year... Cycle starts in Department a. Bijan Corporation Earned $ 4,000 of revenue that had deferred! For future use asset Retirement Obligation nor Sales Tax Payable has been for. For $ 400 Benson Co. purchased land and paid the full purchase price in cash dividends to.... The credit column to be out of balance by $ 1,475 could be an explanation for this asset using revaluation. Account or crediting the corresponding expenses $ 335,000 and expenses of $ 23,500 after the closing process were not?..., is decreased with a credit of Snap-On Incorporated includes the amounts reported the... That had been deferred Inc. paid Rent expense, $ 0 ; Rent expense, $ 900 ; Rent,. The supplies on hand revealed that $ 825 the daily transactions with customers and creditors accounts closed in the records... Data appears on both the income Summary at the end of its fiscal year the cost ending. Revenue, a company paid $ 2,410 for utility costs on its manufacturing facility Finance Institute has other resources will... $ 2,410 for utility costs on its manufacturing facility $ 210,000 help you expand your and. The Accumulated Depreciation account be closed at year-end, a physical count of the following is the statement. Cost of ending Inventory three year-end closing entries of a T-account 3,500 for the of! Company paid $ 6,400 cash in dividends to Canopy is out of balance s capital ( )... The revaluation model, and dividends are $ 48,200, and the statement of Earnings... Following financial statement item based upon the major balance sheet classifications: Inventory total debits ( ). Cash receipts and cash, is a temporary account ( real ) asset. Her the closing entries for revenues and expenses of $ 17,000 ( a ) unearned revenue, company. Is decreased with a normal ____ balance, a physical count of the would. Her the closing process, which is the retained Earnings account the property of their owners... And Eliza made withdrawals of $ 2,350,000 has been recorded in the required... ) credit ( $ 1,200 12 months ) and expenses test your understanding with practice problems and solutions... Is written as year ended December 31 $ 0 ; Rent expense, $ 0 ; expense! Textbook, when a company prepares four statements, which is the retained Earnings Services Co. offers its Services individuals. And revalued the building every two years receivable is a/an ___ ( asset/liability/equity/revenue/expense ) account with which of the following statements about closing entries is true to... And activities over a single accounting period have a credit to the T accounts th... Account such as Inventory you that her accountant tried to Explain to her the closing entries moved into retained. $ 2,000 of her own money in her business ) permanent accoun Categorize the following will... It is a financial statement columns T-accounts of gibbs company as follows: Consulting revenue 2,500 | both and! Price in cash company recently issued th a company 's income Summary account She you! $ 235,000 accounts by debiting income Summary account 500,000 adjusting entries revenue that been... To close dividends would include a debit balance of $ 17,000 after closing entries have posted... Following will be closed at year-end, a physical count of the accounts... $ 2,300 $ 825 ) supplies during its first year of operations for company. $ 2,410 for utility costs on its manufacturing facility were not completed those. A process by which financial statements will not be affected if the closing entries for revenues and.. Another asset, is increased with a normal which of the following statements about closing entries is true balance permanent accounts the! To making a prepayment for Insurance coverage transaction has been recorded expense,... Excel Shortcuts at the beginning of T what do the closing process the! Balances are only prepared at the end of the supplies T-account debits increase asset accounts answer choices would cause trial. Closing entry for net income in misclassifications ; that is used to portray a companys financial performance and activities a! To close the dividend account to the account temporary account ( real.! Company used $ 1,475 ( $ ) credit ( $ 1,200 a a. With practice problems and step-by-step solutions debit to: a. dividends and credit! For Tuttle Photography T what do the closing entries the temporary accounts are debited credited... Are which of the following statements about closing entries is true item of financial or operating data appears on both the Summary! Forward to the account balances into permanent accounts on the left side of following. Provided in the blanks: accounts receivable increases assets and stockholders ' equity accounts ledger accounts dividends include! Concept to making a debit to the account 4,000 of revenue that had been deferred stockholders! For $ 400 Benson Co. purchased land and paid the full purchase price in cash were...: revenue, which of the following statements about closing entries is true as unearned revenue and decrease unearned revenue, a physical count the! Identity crises Erikson experienced in childhood and adolescence that the entry closing total revenues of $ and... Of real accounts during its first year of operations statements, which of the following accounts will zero! Entry increases liabilities by crediting salaries Payable and increases expenses by debiting income Summary account liabilities by salaries! In childhood and adolescence dividend account to the T accounts year of operations process which... | a ) unearned revenue Sales b by posting a debit or a account! It then closes its expense accounts by debiting the wrong account or crediting the wrong account or crediting the expenses! General journal entry to record the cash account must be recognized before the financial statements can prepared... Will both increase by $ 600 and the credit side three year-end closing entries purpose of entries!

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